The Bank of Bermuda's announcement this week that it is lowering interest rates on loans and mortgages does seem to suggest that its takeover by HSBC Plc. can pay dividends in the local market.

So far, the Island's other lending institutions response has been mainly verbal, with the Bank of Butterfield claiming it already offered the same terms, but if it signals the start of more intense competition in the banking sector then that can only help the consumer and should help to boost the economy.

For the Bank of Bermuda, HSBC's deep pockets mean that it can reduce rates and increase market share without the same concerns other lenders might have about margins. In the short term, that is good for borrowers, who can secure credit more cheaply and build businesses or invest in property without the same carrying costs.

Of course, the businesses still need to be profitable and the property still needs to be available in order to accomplish this, and that is dependent on the state of the overall economy.

There is some risk that easier credit will cause the economy to overheat, especially given the large amount of cash on hand that is floating around the economy as a result of the bank takeover. And what goes down can also go up, so cheap credit now could turn out to be very expensive when interest rates finally start to rise again.

But overall, easing credit is a key component of growth and opportunity and this move is welcome.